Why the Koreans feel betrayed

I was surprised, at a recent conference in Seoul, to find out the Koreans feel betrayed. Not over some Western policy toward North Korea, mind you. They feel betrayed by the global financial system for allowing Greece to be bailed out.

They are disturbed by how quickly some Europeans reached to nonmarket solutions when things got tough. Perhaps the Germans should look to expand the Union to Asia. What perplexed me, however, is not how Koreans feel about this, but that I have not heard of a similar argument in Turkey. Why do we, as the neighbors of Greece and candidates for EU membership, not feel cheated by the nonmarket solutions in Greece?

But let me start with Korea. When compared to Greece today, Korea had been conducting itself more responsibly when the 1997 Asian financial crisis hit. Nonetheless, the country was left out in the cold to find a solution to its problems. Today it seems the whole world is concerned for Greece and people are lining up to present their solutions to its problems. That is because in the past fifteen years, the world has become more complex, more globalized and more interdependent. We are all Greek now. This part is understandable. 

In 1997, when Korea was in trouble, everybody was telling them solutions should be market based. At that time, it was considered a great sin for a country not to pay its debts. That was the easiest way to become a pariah, at least in the eyes of the financial market. During the fifteen years since then, there have been many countries that dared to resort to partial payment or nonpayment of government bonds. And now look at Greece. All the actors of the international financial system, including the IMF, have not only been supporting the nonmarket solution, but they are also trying to convince everybody that this is normal. 

Well, let’s admit there is something wrong with this new norm. The Koreans see the bailout like Turks see EU accession talks. When Turkey asks for something, it gets immobilized in the politics of the member states. When the EU demands something however, it is almost always according to the technical rules of the Club, never its politics. Similarly, in 1997, it was against the technical rules of the market economy to use capital controls on Korea. It was only when the problem arose deep in the center of the system when politics trumped the rules. I think that is where Koreans feel betrayed. The IMF starting to say capital controls are part and parcel of the market economy now is like the Roman Catholic Church accepting abortion as part of the Creed.

The faithful can’t be blamed for feeling doubt.
Why then, do we as Turks, not have that same feeling? I believe the answer is directly related to the strength of free market ideas in our countries. In that part of Asia, the exceptional leaders, the founding fathers, were devoted to economic growth through market-based policies. That was not the case in Turkey.

I do not recall any political leader in Turkey’s past who was committed to free market principles in the way Korean leader Park Chung Hee was. Years ago, I recall an American political scientist asked me a similar question: “Why is economic stability not the major concern of your army after taking over? Why is the Turkish army so different from the ones in East Asia?” I think the answer is lying somewhere here.